Energy savings act hurts housing affordability

With our local communities and state suffering from an ongoing housing affordability crisis, the Senate Energy and Natural Resources Committee will be voting on legislation this week that would make the situation even worse.

The Energy Savings and Industrial Savings Act would result in overly costly and aggressive energy efficiency requirements that would do little to improve the energy efficiency in newly-built homes while seriously exacerbating the nation’s affordability woes by making new homes prohibitively expensive.

The legislation would encourage the Department of Energy to push overly prescriptive and costly energy targets and increase the federal government’s authority to discourage state and local governments from adopting cost-effective and location-appropriate building codes. Model codes are intended to be flexible. What is best for California is not best for Montana. When addressing building codes, Congress should not alter this vital underpinning.

Moreover, the bill would result in costly energy and water conservation mandates in new homes that would add thousands of dollars to the price of a home without a corresponding reasonable payback period of 10 years or less. Failure to consider the true economic costs of energy-use reductions and establish a practical payback period for these investments results in fewer families being able to achieve the dream of owning a home of their own. This comes at a time when housing affordability is near a 10-year low and just six in 10 households can afford a median-priced home.

Sound building codes are already in place in our community and most states across the nation and they are doing their job. New construction is built to more stringent codes and standards and is more resilient than older housing – a fact that FEMA and others have reported numerous times.

More rigorous energy conservation requirements for new homes will not only significantly increase the cost of these homes, they will encourage people to remain in older, less energy-efficient housing. The fact is, there are roughly 137 million units in our nation’s housing stock. Approximately 130 million of these homes were built before 2010, and therefore, were not subject to the new building codes now in effect.

In other words, new homes represent a small sliver of the nation’s housing stock and are the most energy efficient. Therefore, improving the energy efficiency of the 130 million homes built before 2010 must be the focus for lawmakers if they want to significantly reduce emissions. This is a much more practical and effective way to achieve energy savings than targeting new homes.

The Senate bill would further hurt housing affordability by setting requirements for homes to meet net zero or near zero emissions or energy usage. The current demand for these homes represents a tiny fraction of the housing market and building these homes is extremely difficult, costly and impractical in most if not all of the nation.

This is not to say that we should abandon efforts to build a cleaner economy. Improving energy efficiency in the residential sector for new and existing homes is a laudable goal and Montana’s home builders want to work as a partner with local, state and federal officials to achieve this objective. But we need to do this in a practical way that does not jeopardize housing affordability. For example, climate change mitigation programs that recognize and promote voluntary above code compliance for energy efficiency have a proven track record and demonstrate that mandates, such as those stipulated in the Senate legislation, are not necessary.

Sen. Daines needs to vote no on the Energy Savings and Industrial Savings Act. Congress must seek solutions that are market driven as well as focus on increasing the energy efficiency of the existing housing stock.

Steve Snezek is executive director of Montana Building Industry Association.